SVP: Carolyn Jordan
Credit Union: Neighborhood CU
Market: Dallas
Assets: $255 million
Once upon a time, credit unions could boast that their not-for-profit structure and the related tax exemption allowed them to offer better rates than banks. No more.
"It's been unbelievable. I have never seen a market like this where the banks really are offering higher rates on deposits than we are," Jordan told Credit Union Journal. "This is not the way it's supposed to be. We were always higher than the banks. Not anymore."
In the last six months, banks in Neighborhood's neighborhood have been aggressively raising rates. "Wachovia is one of our major competitors, and they have a 12-month CD at 4.25% APY," she said. "We are realizing we can't keep our rates that high."
NCU's response? "We have a prize-based savings account with quarterly drawings for plasma screens and other prizes, but then we have an annual drawing for $25,000, and that is proving very popular," Jordan said. "We have been strongly marketing that the last few months. We have really ratcheted up our marketing, especially to non-members, for the big giveaway."
Neighborhood CU has been keeping its standard CDs priced "relatively low," but does offer two "target CDs" to attract the more rate sensitive. "We are hoping this stabilizes in the next three months or so; we would not be able to do this indefinitely. One thing in our favor is we have a portfolio of CDs from about 18 months ago at 5% coming due. As those roll off, that will help us keep our rates high."
Even so, the real focus, she said, remains on building core deposits. In addition to the prize savings account, launched in July 2007, Neighborhood is also looking at rewards checking and other means of luring core deposits.
